Statistical sampling generally may be applied to test internal control when the client's internal control procedures:
A)Depend primarily on appropriate segregation of duties.
B)Are carefully reduced to writing and are included in client accounting manuals.
C)Leave an audit trail in the form of evidence of compliance.
D)Enable the detection of material fraud in the accounting records.

Question

Quizplus · Accepted Answer

Sampling can be applied when the client's internal control procedures leave an audit trail in the form of evidence of compliance. This means that the control procedures are documented and can provide evidence of their effectiveness. In such cases, auditors can select a sample of transactions and test the internal controls to ensure that they are operating effectively. Therefore, choice C is the best option. The other choices do not necessarily provide evidence of compliance that can be tested through sampling.

Statistical Sampling Generally May Be Applied to Test Internal Control